Roku has been having a tough time lately. The once high-flying streaming company has seen its stock price drop by about 80% since July last year. And now, according to a new report, Roku may be in negotiations to be acquired by Netflix.
If the deal goes through, it would be a major shakeup in the streaming industry. Roku has long been one of Netflix’s biggest partners, helping to power the company’s ctv advertising business. But as Roku’s business has struggled, Netflix has been investing more in its own ctv advertising platform.
The acquisition would give Netflix a direct path into Roku’s massive base of users and could help the company expand its ctv advertising business even further. It’s still unclear if a deal will actually happen, but it’s clear that Roku is in need of a lifeline.
Netflix could be developing its own streaming stick, and Roku would be the perfect partner. Roku has a proven track record with its streaming sticks, like the Roku Express (2019) and the Roku Streaming Stick+ (2021).
These sticks are great for streaming Netflix content in HD or even 4K. So partnering with Roku would give Netflix the best chance to develop a high-quality streaming stick of its own. Plus, with Roku’s experience in the streaming stick market, Netflix would be able to hit the ground running and avoid any costly mistakes. It’s a win-win for both companies.
Roku has also entered partnerships with brands like Hisense (with the Hisense Roku TV) and TCL (with the TCL 5-Series 2020 QLED TV) both of which have Roku’s streaming platform built-in. Netflix could be looking to make its own Netflix TVs just like the telecommunications company Sky has done in the UK with Sky Glass.
Roku has been the top connected TV platform in the United States for some time, but it faces challenges from smart TV manufacturers that have their own ad-supported platforms. A possible acquisition by Netflix could help Roku maintain its competitive advantage. Roku users are highly engaged with streaming content, and the platform offers a variety of options for advertisers.
However, Roku does not have its own subscription video service, unlike some of its competitors. Netflix is the world’s leading streaming platform, with over 167 million subscribers worldwide.
The two companies already have a close relationship, and integrating Netflix’s content onto Roku’s platform would give Roku a significant boost. It would also allow Netflix to expand its reach even further into the living room
Because of this Roku recently suspended employee trading of its stock. The news sent Roku shares soaring on Thursday, with the stock up more than 15 percent in midday trading.
The report, which cited unnamed sources familiar with the matter, said that Roku halted employee trading after an exec shared “a rumor” that Netflix was considering acquiring the company. If it were acquired by Netflix, it would be a major consolidation in the streaming space.
But for now, it’s just a rumor. Stay tuned.